Sunday, January 13, 2008

Michigan property taxes to high?

Fighting Your Michigan Taxes

Fighting your Michigan Property tax assessment

So you think you are paying too much in property tax. How do you know that you are? First of all, do you understand the difference between your state equalized value (SEV) and your Taxable Value?Remember you are not appealing the taxes, you are appealing the assessment, the SEV. By appealing the SEV you reset the SEV and the taxable value. It should be in your best interest for years to come.

Difference between SEV and Taxable Value
Your SEV is determined or set when there is a change in ownership of the property. I.E. when you buy the property the SEV is "reset" by the assessor to the current SEV. The state equalized value (SEV) is 1/2 the cash value of the property. (Or market value). The assessor usually determines what the SEV is by using comparables that have sold over a 2 year period. Just because you bought the house at $200,000 doesn't mean that the SEV will automatically be $100,000. The SEV value of the house may be above or below the purchase price. In the buyers market of 2007 & 2008 I am seeing many SEV's higher. That home with a $200,000 purchase price may have a SEV of $260,000.

After you buy your home then taxable value will become more important. There are two numbers on your tax bill. SEV and the second is taxable value. Proposal A of 1994 changed the way taxes were determined. Instead of increasing taxes based on 50% of actual cash value, commonly referred as SEV (state equalized value) now after the first year you buy a home property taxes are based on taxable value. If a property is not acquired during that tax year then the increases in taxable value are limited to the lesser of five percent or inflation. So boiling that down in English the first year you buy a home the taxes are based on SEV. The second year the taxable value is SEV plus the lesser of five percent or inflation. Remember inflation on the house can be negative so sometimes taxable value and SEV can go down.
The first year you are taxed on the SEV value and then from then on you are taxed on the taxable value.

The idea of Proposal A was to limit the huge increases in property value so people would not be forced out of their home because it was worth so much. Proposal A would average out the increases in your property tax.
So after the first year the number you need to pay attention to is taxable value. That is how your taxes are determined. The taxable value times your cities millage rate will equal the amount of tax you owe. In a rising real estate market your SEV will be much larger than your taxable value. The reason for that is that taxable value can only increase the lesser of 5% or inflation where SEV is similar to the market value. In most cases if a person has lived in a home for many years the SEV will be much larger than the taxable value.
*Millage rate explanation
*More on Millage rate explanation
*Oakland County Millage rates
*Wayne County Millage Rates
*Livingston County Millage rates
*Michigan Millage Rates
So in order to reduce your taxes you must be able to reduce your State Equalized Value (SEV) below your taxable value or it is not worth fighting for.Fighting your taxes will take time, and maybe a little money. You have to remember the tax system and the municipalities want to keep the taxes as high as possible to keep their revenue up. So sometimes you will not win the tax fight. Sometimes the boards of review are a rubber stamp to say "NO" forcing you to take it to the next higher level. The system is set up to protect the assessment and the burden of proof is upon you. You must get the facts to change your taxes.

For the steps on How to fight your Michigan Property taxes, How to lower your Michigan Property tax assessment feel free to go to my website and visit my millage rate explanation or fighting Michigan taxes.

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